Since January, we have seen viewings flooding in at unprecedented levels. We believe it is this influx of first time buyers that is causing a Mexican wave throughout the market and putting a huge strain on agents and solicitors across the country.
Brighton, UK (PRWEB UK) 21 February 2012
Internet estate agents House Simple are challenging the Government to act on stamp duty and take responsibility for overhauling a tax that is either financially crippling or simply a deterrent for hundreds of would-be buyers.
In the last week or two, interest rates have been held at 0.5%, and mortgage providers have cut the costs of five- and ten-year fixed-rate mortgages to the lowest ever levels. But it’s not enough, says Sophie Gosling, HouseSimple Company Director: the Government should do its bit and take responsibility for accept overhauling the whole system.
As HouseSimple covers the whole of the UK, the company is in a good position to see how the Government’s tweaking of stamp duty tax is affecting the market. The ‘stamp duty holiday’ for first time buyers was introduced in the 2010 Budget. Its impending deadline – 24 March – is the likely reason for the spike in interest seen by property portals Rightmove and Zoopla in January 2012. Rightmove experienced record activity over the New Year period and the Royal Institution of Chartered Surveyors reported that nearly 20% of surveyors predict transaction levels will pick up over the next three months, the strongest reading since May 2010. While estate agents and solicitors are feeling the pressure, first time buyers are being urged not to rush into hasty decisions,
Sophie Gosling said, “Since January we have seen viewings flooding in at unprecedented levels and we believe it is this influx of first time buyers that is causing a Mexican wave throughout the market and putting a huge strain on agents and solicitors across the country. This pressure is due to first time buyers becoming desperate to tie up a deal before the tax holiday finishes. We believe that solicitors and agents will come under ever increasing pressure to work magic in getting sales through in time as we get closer and closer to the deadline.”
While this has had a short-term positive effect on sales, HouseSimple is aware of the impending slump that is likely after the 24 March deadline has passed. Sophie said, “Our opinion is that a rising curve with peaks and slumps is more problematic than a smooth line and in this case it would have been better for the housing market to have developed naturally. We are concerned about the effects of the slump that is coming which will be in the middle of what is seasonally one of the busiest times of the year.”
The Council of Mortgage Lenders is calling for the stamp duty holiday to be extended beyond 24 March, fearing a damaging fall in activity after the exemption ends. While HouseSimple agree with this they're urging the Government to go one step further and address the flaws in tax overall.
“The way that stamp duty is levied is inherently very flawed,” said Sophie Gosling. “At the moment the jump from 1% to 3% at the £250,000 level causes all sorts of issues. It makes no sense that a property worth £250,000 should have stamp duty of £2,500 applicable, but a property worth £1 more should have stamp duty of £7,500 applied. Why is the 3% not payable on any amount over the £250,000 threshold, instead of the whole value of the property? With solicitors’ costs and estate agent fees buyers have enough to worry about and they begrudge this hike in tax at the £250,000 threshold.”